Most US Voters Think Cannabis Businesses Should Have Access To Legal Banking Services - So Why Isn’t It Available Yet?
Legal cannabis businesses still face the ludicrous struggles of operating in all cash. This comes with serious consequences, particularly when it comes to safety and security not just for dispensaries but for their employees and the public as well.
It all boils down to the federal status of marijuana: since it’s still a Schedule 1 substance, banks will continue to refuse working with dispensaries and other cannabis businesses, making it impossible for them to allow customers to pay in credit card. Consumers are constantly looking for ways to pay through credit card but it isn’t the fault of dispensaries when they can’t. Federally regulated banks just cannot work with businesses involved with Schedule 1 substances.
A new survey even reveals that most voters already think that cannabis banking reform should already happen. The poll, conducted by the Independent Community Bankers of America (ICBA), revealed that 71% of US voters back cannabis businesses’ ability to access banking services in states where it is legal.
ICBA was the first national banking group to ever back the SAFE Banking Act, and they also testified before Congress to help pass the bill.
“US voters have made clear that current law inhibiting access to the banking system for cannabis-related businesses has a negative impact on local communities,’ said ICBA’s CEO and President, Rebeca Romero Rainey. “With a supermajority of US voters voicing support for allowing cannabis-related businesses access to the banking system, the Senate should act now on bipartisan cannabis banking legislation that the House has passed seven times,” she says.
The poll also found that over 80% of voters acknowledge that businesses who work solely with cash have to face a much higher risk for theft or robbery. Meanwhile, 62% of voters agree that preventing cannabis-related businesses from being able to use the banking system will increase the risk to public safety.
“Americans understand that no industry can operate safely, transparently or effectively without access to banks or other financial institutions, and it is self-evident that this industry, and those consumers that are served by it, remain severely hampered without this access,” explains NORML Deputy Director, Paul Armetano in a statement on the matter. “In order to truly bring the marijuana industry out of the shadows, actions need to be taken by Congress to repeal these outdated and discriminatory practices,” he says.
Why We Need To Pass The SAFE Banking Act Now
The SAFE Banking Act was introduced last March 7, 2019 to the House of Representatives thanks to Ed Perimutter (D-CO). However, the bill has had to face numerous hurdles over the last few years.
The SAFE Banking Act was designed to offer protection to banks and other financial institutions and their insurers if they decide to work with legal cannabis businesses that comply with state laws. It also prevents federal bank regulators from penalizing financial institutions if they service cannabis-related businesses. Should the law be enacted, any transactions among banks with cannabis businesses would no longer be treated as an illegal activity as it does today, given the Schedule 1 status of marijuana.
In addition, the bill would offer protection for lawyers that consult with cannabis businesses. It would ensure that people that work in the legal cannabis industry can have access to counsel while preventing money laundering and other crimes that have been linked to businesses operating in cash transactions.
According to Sen. Bob Menendez (D-NJ), the bill can also protect ancillary businesses that work with the cannabis industry. During a Senate Banking Committee hearing last week, he discussed the urgency needed to pass the SAFE Banking Act since it also covers provisions for insurance.
“I’m concerned that businesses that have nothing to do with cannabis could face serious consequences,” Sen. Menendez told Kathleen Birrane, who represents the National Association of Insurance Commissioners. “Imagine a scenario where a New Jersey lightbulb manufacturer sells a product to a state-legalized cannabis business and there’s a fire related to the lightbulb causing the business to suffer loss,” he explains. “Under current law in the scenario I just described, could the lightbulb manufacturer’s insurance company face federal charges they paid the claim?”
There are many lawmakers that already support the bill, though there are those on the Senate leadership that don’t support it.
“It’s time to close the deal in SAFE Banking Plus,” adds Sen. Jeff Merkley (D-OR). “No one has paid a political price ever for supporting cannabis in this country,” he says.
Last July, the SAFE Banking Act was passed in the US house for the 7th time but Senate has yet to take it up.
Menendez also authored the Clarifying Law Around Insurance of Marijuana (CLAIM) Act, which would protect insurers working in cannabis. It was added as a provision within the SAFE Banking Act.
Aside from safety concerns, businesses that operate on cash-only basis sees a much higher turn over rate. According to data, there is actually a 40-60% employee turnover rate within the cannabis industry. Many employees will tend to quit because they are scared of the consequences that come with dealing in all-cash transactions. These include the risk of being involved in dangerous situations including armed robbery and theft. These have caused employee fatalities in the past, so it’s a completely rational fear.
To add insult to injury, cannabis businesses already have a difficult time attracting the right employees due to banking difficulties. Without the SAFE Banking Act in place, they cannot offer 401(k) plans and other necessary financial benefits that would attract the right people. These seem like a pipe dream when basic financial services such as being able to open a savings or checking account is already impossible. This is why the cannabis industry needs the SAFE Banking Act right now.
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